The Indian government has reportedly decided to scrap the $490 a tonne minimum export price (MEP) on non-basmati white rice and the 10 per cent export duty on parboiled rice.
The decision was taken at a high-level inter-ministerial panel on Wednesday and a notification on this will be issued shortly, officials in the know of the development told businessline.
Trade sources said the decision followed due to surplus stocks, making it difficult to procure rice for buffer stocks in the current kharif marketing season. Shortage of storage space has been cited a reason for rice procurement by the Food Corporation of India (FCI) and its nominated agencies dropping by half during October 1-15.
Pricing by rivals
Earlier, this week the Indian Rice Exporters Federation (IREF) had met Commerce Minister Piyush Goyal and urged him to remove the MEP and export duty due to surplus stocks and competitive pricing by rivals in the global market such as Pakistan.
According to the Thai Rice Exporters Association, India’s 5 per cent white rice is currently quoted at $488-492 free-on-board (f.o.b), while Pakistan is offering it at $481-85 a tonne. India is offering 25 per cent white rice at $491-495, while Pakistan is selling at $440-444 a tonne.
The other main competitors - Vietnam and Thailand - have priced their rice above $500 for both varieties. Despite the 10 per cent export duty, Indian parboiled rice is the most competitive at $490-494 compared with Pakistan’s $500-504 a tonne.
A Delhi-based analyst said lack of storage cannot be a reason for the Centre to scrap the MEP and 10 per cent export duty as it was lifting 40 lakh tonnes from Punjab immediately.
“The Centre can procure even excess grain and store it safely. This cannot be a reason to ease the curb further,” he said.
On September 27, the Government cut the export duty on parboiled rice to 10 per cent from 20 per cent fixed in August 2023. On September 28, it lifted the ban on export of white rice, which has been in force since July 2023. However, it fixed a MEP of $490 a tonne.
India imposed curbs on rice exports since September 2023 to rein in food inflation after wheat and rice production were affected by the vagaries of weather. While wheat was affected by unseasonal rains, rice production was hit by deficient rainfall in the growing areas in the eastern region. Paddy cultivation was again hit by dry weather caused by El Nino in 2023.
Despite these, rice production has been pegged at a record 137.82 million tonnes.
Welcoming the development, Rajesh Jain Paharia, a New Delhi-based exporter said the move encourage Indian exporters to compete against rivals strongly.